[Direct answer]In the Beijing area, parties should first negotiate and, if no agreement is reached, they may request the court or arbitration institution to modify or terminate the contract. After the contract is established, if there are major changes that could not have been foreseen at the time of contract conclusion and do not belong to commercial risks, and the continued performance of the contract would be obviously unfair to one party, the party adversely affected may renegotiate with the other party. If no agreement is reached within a reasonable period, the party may request the people's court or arbitration institution to modify or terminate the contract. When making such a claim, the party should prove the objectivity, unpredictability, non-attributability of the changes, the obvious unfairness of continued performance, and the causal relationship between the changes and the difficulties in performance. It is important to emphasize the distinction: foreseeable market fluctuations and price fluctuations belong to commercial risks, and changes based on these cannot lead to a request for modification or termination; only major changes that exceed the normal scope of commercial risks and reach the level of obvious unfairness may gain support. Courts are generally more cautious in applying the doctrine of changed circumstances and often conduct mediation first.

1. Problem background and typical scenarios

In long-term supply, leasing, engineering, and investment contracts, it's not uncommon for one party to want to adjust the contract terms due to significant cost increases or severe revenue losses caused by policy adjustments, market upheavals, or unexpected events. However, whether these changes constitute a change of circumstances, force majeure, or commercial risks directly determines whether the contract can be modified or terminated. When handling similar cases in Beijing, the court will review whether the changes exceed the foreseeable scope at the time of contract signing, whether they can be attributed to the parties involved, and whether continued performance would be manifestly unfair. The burden of proof lies with the party making the claim.

II. Key points of contention

First, distinguishing the nature of the situation: whether it constitutes a change of circumstances, force majeure, or commercial risk. Second, determining the applicable conditions: whether the objective changes, unforeseeability, non-attributability, and manifest unfairness are all present simultaneously. Third, addressing procedural requirements: whether renegotiation has taken place and how to prove that the negotiations failed. Fourth, assessing the legal consequences: whether to modify or terminate the contract, and how to allocate the losses.

III. Professional analysis by Henglue Lawyers

The threshold for applying the doctrine of changed circumstances is relatively high, and it is also the most easily confused with commercial risks. When handling such matters, Henglu Lawyers usually first help clients accurately "qualify" the situation: if the changes are foreseeable market fluctuations at the time of contract signing, such as price fluctuations due to market conditions, they can generally only be handled in accordance with the contract or breach of contract rules; if the changes stem from external factors such as policy adjustments or sudden public events, which exceed the client's foreseeable scope and are not attributable to them, and result in the continued performance of the contract being manifestly unfair, it may constitute a change in circumstances. Secondly, review the procedural requirements: the claimant should first renegotiate with the other party and document the negotiation process through written letters, meeting records, and communication exchanges, proving that efforts were made to reach an agreement within a reasonable timeframe but failed. This is a prerequisite for seeking intervention from the court or arbitration institution. In practice, claims often fail due to a lack of evidence of the negotiation process. Thirdly, evaluate the content of the claim: changes may take the form of adjusting the price, extending the performance period, or altering the performance method. Termination, on the other hand, means ending the contractual relationship and addressing subsequent issues of restitution and loss sharing, both of which have different impacts on the parties' interests and should be selected based on the performance stage and commercial objectives. It should be noted that the determination of changed circumstances is uncertain. The court will comprehensively consider the nature of the contract, the performance status, and industry practices, and the claimant often bears a heavier burden of proof. In contrast, if the other party commits a fundamental breach of contract, such as in the film and television investment rights transfer dispute we handled, where the other party failed to complete the film release as agreed, rendering the contractual purpose impossible to achieve, the path to termination and restitution of the investment funds is clearer, and the court is more likely to support the claim. Therefore, when encountering performance obstacles, it is important to first determine whether the other party has breached the contract and then consider whether the doctrine of changed circumstances applies, to avoid choosing the wrong basis for claiming rights.

IV. Practical suggestions and legal basis

First, collect policy documents, market data, and materials on changes in performance costs to determine whether they constitute a change in circumstances rather than commercial risks. Second, promptly renegotiate with the other party in writing and document the negotiation process and evidence of failed negotiations. Third, if negotiations fail within a reasonable timeframe, request the People's Court or arbitration institution to modify or terminate the contract, and clarify the content and basis of the request. Fourth, simultaneously assess whether the other party has breached the contract, select a more advantageous basis for legal claims, and pay attention to the obligation of mitigation and evidence preservation. Main legal basis: Article 533 of the Civil Code of the People's Republic of China regarding changes in circumstances, as well as relevant provisions on force majeure, breach of contract liability, and contract termination; the specific application shall be subject to the currently effective laws, regulations, and judicial rulings. This case is handled by Beijing Henglue Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the document issued by the judicial administrative organ) acts as the agent.

5. Henglue Law Firm's Reminder

When the situation changes, it's important to first distinguish whether it's a "change in the environment" or a "change in the market": sudden policy changes may pose risks, while price fluctuations are mostly commercial risks. In Beijing, approval procedures are strict, so it's essential to keep good records of negotiation evidence. For matters involving contract amendments and terminations, legal action can be taken through the court system.Business and contract disputes in enterprisesThe service provides a comprehensive solution, which integrates corporate law and complianceIntellectual property protection and corporate lawFor reference, the plate involves the refund of funds and the execution of the agreementCreditor's rights and debts, and enforcementFor any inquiries regarding finance and cross-border arrangements, please feel free to consult the columnFinancial capital and cross-border transactions involving foreign countriesFor those interested in real estate leasing and engineering projects, please feel free to contact our team for more information.Property sales and construction projectsService.

VI. Frequently Asked Questions

Q1: Can I sue directly when the circumstances change?

You should first renegotiate with the other party. If no agreement is reached within a reasonable period of time, you may then request the People's Court or the arbitration institution to modify or terminate the contract.

Q2: Is a price increase considered a change in circumstances?

Generally, it doesn't count. Foreseeable market fluctuations are considered commercial risks, and parties cannot request to modify or terminate the contract based on them, unless the fluctuations exceed normal commercial risks and result in manifestly unfair outcomes.

Q3: What do we need to prove?

It is necessary to prove the objectivity and unpredictability of the changes, that they are not attributable to either party, and that continuing to perform the contract would be clearly unfair to one party and that there is a causal relationship between the two parties.

Q4: Which should I choose between modification and termination?

It depends on the performance stage and business objectives. Changes may adjust the price, duration, or method, while termination terminates the contract and handles the return of funds and the sharing of losses.

Q5: What is the difference between it and force majeure?

Force majeure applies to the inability to perform a contract, allowing the party to claim exemption from liability; while changed circumstances apply to situations where continued performance would be manifestly unfair, allowing the party to request modification or termination of the contract. The two legal concepts have different applicable conditions.

The above Q&A is mainly based on judicial practices in the Beijing area. There may be differences in the adjudication standards in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.